Brexit and the Impact on the Charities and the Third Sector

Brexit and the Impact on the Charities and the Third Sector

On the morning of June 24th Britain will wake up to discover that it is either still a part of the largest free market and union of nations on the planet, for which it has been a member for over four decades or that Brexit has been realised and the mooring lines have been severed and we begin the process of floating alone.

The referendum, regardless of which way it goes, has brought into focus what EU membership has done for British individuals and industry alike. Here we are going to explore some of what that membership has meant for charitable organisations and what the implications of a potential Brexit might be.

What’s the chatter on the street?

The Britain Stronger in Europe campaign recently revealed that for the year of 2014 a cool £217m was issued by the EU and shared between 249 charities with the top ten all coining between £4m and £39m. The obvious worry amongst these organisations is that a break-up from the Union would see these figures compromised. Sir Stephen Bubb, head of the charity chief executives body Acevo, explained; “Not only does our membership help us work with partners across the continent, fostering civil society, but some of Britain’s best-known charities receive significant funding to carry out their vital work.”

However, Jayne Adye, campaign director of Get Britain Out, refutes this figure claiming the UK gives much more money to the EU than it receives back. Therefore, an exit would mean the Government would have more money to support the voluntary sector and a range of other British industries.
“Our elected Government in Westminster is much better placed to delegate which organisations receive what funding…British charities will survive outside the European Union, and could potentially receive even more funding from a sovereign British parliament than they do now.”

Matters to take into consideration though are not all directly financial. There is little debate that Britain benefits greatly from the skill sets brought ashore with European migrants. Brian Moran, director of digital strategy at Cause4 believes that a Brexit would hamper the ability to recruit and retain talent from within the EU. “If the free movement of workers from the EU to the UK ends, the concern is that this would negatively affect the ability of UK businesses, including charitable organisations, to access the right skill sets from abroad.” Furthermore, many British charities work and fundraise across Europe freely. This freedom of movement that charities benefit from both here and across the continent will almost certainly change in the event of a Brexit and it is difficult to see how this will be for the better.

‘Red tape’ resides as one of the flagship arguments of the Leave campaign and elements of it are hard to dismiss. The recent decision of the European Court in the Porsche case has had the effect of preventing the UK government from protecting the income of UK charities, by introducing restrictions on donations by high net worth individuals. The Leave campaign argue that this restriction has led to a reduction in donations being made, as breaching the restriction would result, in some cases, in burdensome financial penalties being incurred which would even exceed the donation being made. Of course this would become a redundant argument if a Brexit sees charities receiving much less in grants from central government anyway than they would from the EU.

Ultimately of course, the decision on what is best rests with the individual as they stand at the ballot box, complimentary pencil in hand. Readers undecided may be interested to know that according to recent polls 74% of leaders running social enterprises plan on voting to remain in the EU with just 15% favouring a Brexit. Such overwhelming support of Remain may have been more observable but for charity watchdog The Charity Commission ruling in March that charities may not enter the European debate and that activity would be ‘closely monitored’.

Collective voices may have been silenced for now but not on the June 23rd. Whatever you do that day, make sure you vote.